Pan American Silver Stock

Pan American Silver Corp. engages in the operation and development of, and exploration for, silver and gold producing properties and assets.

The company’s principal products are silver and gold, although it also produces and sells zinc, lead, and copper. As of December 31, 2022, the company operated mines and developed mining projects in Mexico, Peru, Canada, Argentina and Bolivia, and had control over non-producing silver assets in each of those jurisdictions, in addition to Guatemala and the United States.

The company is a leading Canadian-based precious metals producer with significant gold and silver production, development stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile and Argentina.

Strategy

The company will continue to strengthen its position as one of the world’s leading primary silver mining companies by acquiring or discovering silver resources that have the potential to be developed economically and to add meaningfully to its production profile.

The key elements of the company’s strategy are to increase production; increase mineral reserves and mineral resources; continue to be a ‘low cost producer’; acquire additional silver properties; and continue to be a responsible company, committed to sustainable development.

Principal Products and Operations

The company’s principal products and sources of sales are silver and gold dore and silver bearing zinc, lead, and copper concentrates. In 2022, the La Colorada, Dolores, Huaron, Morococha, Shahuindo, La Arena, Timmins West, Bell Creek, Manantial Espejo and San Vicente mines accounted for all of the company’s production of concentrates and dore.

Silver and Gold Dore

The company’s principal buyers of silver and gold dore produced from its La Colorada, Dolores, Manantial Espejo, Shahuindo, La Arena and Timmins mines, once refined, are international bullion banks and traders, except for the gold produced from La Colorada, which is sold to Maverix Metals Inc. (Maverix) pursuant to the Maverix Gold Stream. Silver and gold dore is delivered to refineries in Canada, Mexico, Germany, Switzerland, and the United States, and subsequently transferred to the accounts of the company’s buyers.

Zinc, Lead, Copper and Silver Concentrates

The majority of the company’s concentrate production is sold to international concentrate traders and smelters. Concentrate production from the La Colorada mine is delivered to the buyers at various ports and smelting facilities in Mexico. Concentrate production from the Huaron mine is delivered to the buyers at the port of Callao, Peru, with the exception of a portion of the zinc concentrate, which is delivered to the Cajamarquilla smelting facility in Peru. Concentrate production from the San Vicente mine is delivered to the buyers at ports in Chile and Peru.

Mexico

La Colorada Mine

The La Colorada underground silver mine is located in Zacatecas State, Mexico, approximately 100 kilometres (km) south of the city of Durango and 155 km northwest of the city of Zacatecas. The mine is accessed primarily from the cities of Durango and Zacatecas by paved highway and all weather gravel roads.

The company’s wholly-owned subsidiary, Plata Panamericana S.A. de C.V. (Plata Panamericana), owns and operates the mine. The La Colorada property, including certain exploration concessions outside the mining area, consists of 56 mining claims totalling approximately 8,840 hectares. The company has control over or rights in respect of approximately 1,300 hectares of surface area covering the main workings.

Dolores Mine

The Dolores mine is an open pit silver-gold mine located in Chihuahua state, Mexico, approximately 250 km west of the city of Chihuahua.

The Dolores mine mineral rights are held under three contiguous mining concessions with a total area of 27,700 hectares. The company makes the required payments to maintain the mining concessions and have agreements in place granting surface rights and legal access to the mining operations.

During 2022, the company stacked 8.0 million tonnes on the leach pads and produced approximately 2.2 million ounces of silver and 136.9 thousand ounces of gold.

Peru

Huaron Mine

The Huaron mine is an underground silver mine located 320 km northeast of Lima in the Huayllay district of the province of Pasco in Peru. The nearest town is Cerro de Pasco, and access from Lima is available by rail or paved highway.

Huaron is 100% owned and operated by PAS Huaron, a Peruvian entity which is approximately 99.94% held (99.8% including investment shares), directly or indirectly, by Pan American. The mineral rights are held on 171 mining concessions with a combined area of 15,576.31 hectares. There are three types of concessions present on the Huaron mine, including mining concessions, which grant holders of the concessions the right to explore and exploit the mineral resources within the concession; processing concessions, which grant the right to process minerals, and concessions which grant the right to provide auxiliary services to the mining concessions. In 2022, the mill processed approximately 0.94 million tonnes of ore producing approximately 3.7 million ounces of silver, 0.9 thousand ounces of gold, 16.4 thousand tonnes of zinc, 11.4 thousand tonnes of lead, and 4.3 thousand tonnes of copper. The company plans to undertake 20,000 metres of exploration drilling in 2023.

Shahuindo Mine

The Shahuindo mine is an open pit gold mine located in northern Peru, 970 km north-northwest of Lima. The site is approximately 130 km from Cajamarca via asphalt-paved highway (100 km on Highway 3N), and gravel and dirt roads. There are daily flights between Lima and Cajamarca on Peruvian national airlines.

Shahuindo consists of one mineral right, ACUMULACION SHAHUINDO, 100% controlled by Pan American’s wholly owned subsidiary, Shahuindo SAC, and has an approximate area of 7,338.91 hectares.

Shahuindo SAC has acquired 612 surface rights within Shahuindo covering a total area of about 3,144.68 ha. Some of these surface rights were used to relocate local land owners into new areas.

Shahuindo is subject to various government taxes, fees and duties, including the Modified Mining Royalty, OSINERGMIN payment, OEFA payment, corporate taxes, a Temporary Net Assets Tax, SMT, and a worker profit-sharing payment which requires Shahuindo to share 8% of its taxable income with its workers. The company plans to undertake approximately 7,000 metres of exploration drilling at Shahuindo in 2023.

Canada

Timmins West Mine

The Timmins West mine is an underground gold mine located approximately 19 km southwest of the city of Timmins, Ontario. All season road access to the property is provided by provincial Highways 101 and 144.

The Timmins West mine property encompasses a total area of approximately 1,548 hectares, including the Timmins Deposit, Thunder Creek, and 144 Gap properties. Through the company’s wholly-owned subsidiary, Lake Shore, it owns a 100% interest in most of the Timmins West mine property, subject to underlying royalties.

Surrounding the Timmins West mine property is an additional 12,462 hectares of combined crown patents, 21-year term leases, and cell or boundary cell claims containing mining rights and/or surface rights. These properties are subject to various underlying royalties, most ranging from 1.5% to 3% NSRs, many with buy-back options at Lake Shore’s discretion. These properties are 100% owned by Lake Shore, the exception to this is a 55% interest in seventy unpatented mining cell claims.

In February of 2012 Lake Shore and Franco-Nevada entered into a royalty agreement relating to production from the Timmins West mine.

Bell Creek Mine

The Bell Creek mine is an underground gold mine located approximately 14 km northeast of Timmins, Ontario. Access to the property is via an all-weather asphalt and gravel road north of Ontario Provincial Highway 101.

The Bell Creek mine is 100% owned by the company’s wholly-owned subsidiary, Lake Shore. The Bell Creek mine property consists of 2 crown leases, one privately leased patent, and 28 patents for a combined area of approximately 851 ha of mining and surface rights. These properties require annual land tenant taxes, mining land taxes, and municipal tax payments and remain in good standings as of this date.

In December 2007, Lake Shore acquired the Bell Creek mine from Goldcorp Inc. (Goldcorp), subject to a 2% NSR royalty payable to the Porcupine Joint Venture comprised of Goldcorp and Kinross Gold Corporation (Kinross). Kinross subsequently assigned its rights under the agreement to Goldcorp, and in July 2016, Tahoe acquired the royalty from Goldcorp.

In 2022, the company processed approximately 1.7 million tonnes of ore producing a combined 134.6 thousand ounces of gold and 15.3 thousand ounces of silver from the Timmins West and Bell Creek mines.

Non-Operating and Development Properties

Escobal Mine

The Escobal mine is an underground silver-gold-lead-zinc mine in Guatemala, approximately 40 km east-southeast of Guatemala City and 2 km east of the town of San Rafael Las Flores.

The Escobal mine is 100% owned by Pan American through its wholly-owned subsidiary, Pan American Silver Guatemala, S.A. (PASG), and comprises two mineral licenses covering approximately 29.2 square kilometers (km²). These include the Escobal Exploitation License (the Escobal mining license) covering 20 km². PASG also previously held the Juan Bosco Exploration License covering 9.2 km², which was not renewed and is no longer valid. The Escobal mining license is valid for 25 years from receipt of the license on April 3, 2013 and is renewable for an additional 25 years.

Non-Material Properties and Interests

The company owns interests in other mineral properties in each of the jurisdictions in which it operates, including the La Arena mine and the Pico Machay property in Peru, the San Vicente mine in Bolivia, and the Navidad property in Argentina, and certain other interests in Mexico and Canada. The company’s Morococha mine in Peru, and the Manantial Espejo, Joaquin and COSE mines in Argentina are in the reclamation phase and mining activity has ceased. The company’s Alamo Dorado mine in Mexico is in the post-reclamation phase and mining activity has ceased.

History

The company was incorporated under the Company Act (British Columbia) in 1979 under the name Pan American Energy Corporation. In 1984 the company's memorandum was amended to change its name to Pan American Minerals Corp. and in 1995 the company's memorandum was again amended to change the company's name to Pan American Silver Corp.